March 22, 2010

 

CBOT Soy Outlook on Monday: Lower on dollar strength

 

 

Chicago Board of Trade soybean futures are expected to start Monday's day session on the defensive, mimicking the lower overnight theme amid a lack of fresh supportive news.

 

CBOT soybeans are seen opening two cents to three cents lower.

 

Overnight, CBOT May soybeans were 2 1/2 cents lower at US$9.59 1/4 a bushel.

 

The combination of a record South American crop heading to market, a lot of risk-aversion trade amid strength in the U.S. dollar and the absence of supportive fundamental news is seen weighing on prices, said Don Roose, president of U.S. Commodities.

 

The increasing of speculative fund shorts in the market and positioning ahead of next week's planting intentions report will keep traders in a cautious mood, he added.

 

The lack of fresh news is seen promoting a quiet session, with many traders unwilling to take on added risk in the face of psychological pressure from the higher U.S. dollar and weakness in crude oil, metal and equity futures.

 

A firm dollar is often seen as bearish because of perceptions that it makes U.S. grains less attractive to foreign buyers and reduces investors' appetite for risk.

 

Otherwise, traders are seen looking ahead to next week's planting data for the next fundamental clue for price direction, with many traders anticipating increased U.S. soybean seedings in 2010.

 

The market will experience a lot of jockeying for position ahead of the March 31, U.S. Department of Agriculture planting intentions and quarterly stocks report, said Roose.

 

A market technician said first resistance for May soybeans is seen at Friday's high of US$9.64 and then at the March high of US$9.71 1/2. First support is seen at Friday's low of US$9.52 1/4 and then at US$9.42.

 

In overseas markets, soybean futures on the Dalian Commodity Exchange settled slightly higher Monday, with prices consolidating in a tight range as traders stayed cautiously on the sidelines. The September 2010 soybean contract settled up RMB5, or 0.1%, at RMB3,867 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended mostly lower Monday in volatile trade spurred on by conflicting export estimates, said trade participants. The June contract on the Bursa Malaysia Derivative exchange ended down MYR7 at MYR2,570 a metric tonne.